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News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin. Business news and talk as the trading day unfolds on Wall Street. New. (CC)

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U.s. 23, Boeing 12, Becky 11, Davos 11, S&p 11, Google 10, Europe 10, California 10, Ellen Kullman 8, China 8, John 6, Sandy 6, Phil Mickelson 5, Kevin 5, Chuck 5, Verizon 5, Latin America 4, Washington 4, Schwab 4, United States 4,
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  CNBC    Squawk Box    News/Business. Becky Quick, Joe Kernen, Andrew Ross Sorkin.  
   Business news and talk as the trading day unfolds on Wall...  

    January 22, 2013
    6:00 - 9:00am EST  

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good morning. earnings, earnings, earnings. the boj tries to give scar pan another shot in the arm. it is tuesday, january 22nd, 2013. "squawk box" begins right now. >> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew ross sorkin is on assignment. he is traveling to the world economic forum in davos, switzerland.
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and he will join us live from there starting tomorrow. there's a lot of big guests lined up. could be a lot of fun. earnings central is in full swing today. among the names that are reporting before the bell, we have dupont, johnson & johnson, travelers and verizon. four dow components before the bell even rings. our newsmaker this morning is dupont's ceo coming out want 8:00 eastern time. after the bell, technology takes center stage. we will hear from google, texas instruments and amd among others. >> and friday, the 49% mothership and it was good. revenues above expectations. and also a little beat on the bottom line, but a lot of the different business segments doing well. all clicking and stock was up above 22. comcast traded over 40. >> i saw that, too. and it makes you wonder if the dow jones industrial average will follow the transports at
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this point. >> why follow those two so closely? comcast at 51% and 49% owners. i'm hearing that dupont is hitting the wires right now, which is inconvenient for -- >> those of us still getting our computers up and running. >> we're going to talk to ellen kullman. and we'll be able to get a better idea on what's going on. fourth kwarer, one of the numbers i'm seeing, a 12 cents and then adjusted number of 11 cents. and that is versus an expectation of 7 cents. so either one of those on numbers would be above expectations. the sales number for the fourth quarter was 7.3 billion. and the estimate was 7.26 of. so that is doing okay so far. it always helps to get a look at the bid and the ask as those numbers are coming out. at this point, too wide to tell what's happening. the full year, they're giving full year numbers.
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full year 2012 earnings of 333, which was x items. and then i think we're going to see some forecast at this point. 2013 outlook for operating earnings is 385 out of $4.05 a share. and the estimate was for $3.84. so that looks like they are at least -- compared to where the street is, that's above expectations. >> i can tell you about some of the comments from ellen kullman, the chair woman and ceo says at this point they had a record year in new product introductions and that helped strengthen their position. but when you talk about the overall performance, they did say some weakness in markets served by the performance chemicals and communications provided significant challenge necessary 2012. they say they've adjusted their plans to meet the changing market economy and grow the business in a slow growth world economy. again, reflecting slow growth
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overall. i think they had strong numbers when it came to agency. some of those numbers up by 18%. volume was driven by agriculture with robust tales in latin america and a strong selling to the north american selling season along with increases in asia pacific for performance materials, electronics and communications and performance chemicals. >> the stock was higher a year and a half ago or so. but in terms of the last year, it's getting -- it's sort of the in the mid point of the trend. coming back, at least trying to get back to where it was earlier. all-time highs are at about 58. >> in corporate headlines, more developments in the boeing story. there are indications now that the dream liner could stay grounded longer than initially anticipated. investigators turning to the maker of the lithium ion batteries that are used in the planes. that is gsyausa. investigators visited the
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batterymaker yesterday. shares of boeing have started getting to the low end of the range after some choppy trading with every twist and turn in this story. phil lebeau has been following it from the very beginning. he will join us more in the next hour. also, another twist in the hewlett packard saga. the wall street journal reports hp narrowly missed out on an opportunity to buy out that company. the company was told there was an alleged of improper accounting at autonomy. the article says hp executives on the call does not mention that up the food chain to the board or the ceo at that point was leo apoteker. >> he was like a pharmacist, apothecary. >> the board established a limit of how much to pay on autonomy.
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and the board finance committee did not follow normal practices in approving this deal. as people dig back through, there will be even more places they are pointing the finger game. japan's central bank is promising to pump unlimited into the economy and generation some growth. the bank of japan hiked its target for inflation to 2%. i was out last week and it was said from 2014, it would adopt an open ended commitment to assets. there are the asian markets this morning. japan had a big move last week. the nikkei especially new year's, thursday or any, it was up almost 3%. and then there's the yen which traded above 90 at one point last week. but now you can see it, 88.79. and a u.n. agency warns the world unemployment could top record levels this year and
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continue rising until to 17. more than 197 million people worldwide are jobless. an additional 39 million has given up looking for work. i can't start worrying about the world. 139 million? i was worried about the 24 million that supposedly are earth unemployed or underemployed in this country. the international labor organization warns government budget balancing is hurting employment and will probably lead to more job losses in the near future. >> all right. let's take a look at the markets this morning. markets have been sitting at these record levels. you can see right now those dow futures pulling down by about 12 points. s&p futures are indicated slightly lower, as well. but the nasdaq is indicated higher. the dow jones transport sitting at an all-time high. other markets sitting at five-year highs. the big question is whether the dow jones industrial average follows suit. you're a huge transport. >> yeah, i am. that's all all-time highs. >> all-time high. oil prices, you can take a look.
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you'll see right now is down by about 2 cents to 95.54. the ten-year note that had been coming down the yields last week a little bit, you can see the yield right now is at 1.877%. the dollar this morning after the euro picked up strength last week, the dollar is stronger against the euro and the yen and the pound. right now, dollar/yen is at 88.79. gold prices this morning up about $5.80. $1,6933. german chancellor angela merkel is hoel hosting french president francois hollande and his government, his entire government in per lynn today. festivities mark 50 years since the treaty of friendship was signed. that's knight nice. a joint cabinet meeting and parliamentary session is being held also. today's events come as the two countries struggle for a common vision as crisis hit europe. and it's nice that -- >> friendship?
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>> yeah, after that cold and nasty occupation thing in world war ii and all. meantime, in brussels, european finance ministers are meeting. they're expected to give their approval to allow 11 states to start preparations for imposing a tax on all financial market transactions and measures likely to unsettle banks and houses. for more on the story coming out of europe today, let us head to london to kelly evans who is standing by this morning. i like that necklace. i don't know what it means -- what it's saying to me. it kind of looks like -- >> it's telling you to buy goad, joe. it's a subtle signal to investors. i coordinate my wardrobe with the prevailing market move. >> yeah. >> i was thinking you were stepping out there. is that attached to the wall behind you? are you allowed to move or has ross got you --
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>> it's attached to my wrist here with the same thing going on. >> oh, my god. i am actually chained to the desk here because ross westgate, lake-effect snow, is in davos and he will have the very latest out of there and "worldwide exchange" for the rest of the week. we'll also see maria bartiromo there. in the meantime, before that meeting gets under way, france and germany are celebrating their friendship treaty today. it's all about markets in japan and, in fact, we want to give you a sense of the trade that we're seeing, even here in europe affected by what we heard from the bank of japan this morning. now, markets are to some extent in the red across the board. there are few exceptions, but we're seeing declines of about a quarter to a third of a percent. the dax is down. there's concerns about deutsche bank playing into that, as well. the nikkei is shedding abo about .3%. this market has been on a tear as the yen has beakened. in the last couple of months, everything that we learn from the bank today has basically been signaled to markets.
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we know he wanted more stimulus. that's what we got from the central bank today. so while the buy the rumor sell the fact is at play, there's a sense of disappointment. the purchases, the open ended qe won't start perhaps until next year. more importantly, there's questions about achievability. let's scoop around and is show more of the market reaction throughout the day. today's idea that the bank of japan will suddenly be able to achieve 2% simply for sustaining its target. the yield on the ten-year, 0.74%. the 30-year, under 2%. we're seeing an increase this morning, but it's marginal. it's barely a couple of basis points. there's not yet this feeling in markets that they're actually going to be able to do it. the bank of japan had a 1% inflation target for years. it hasn't managed to get there. let's take a look at the forex rates. the dollar/yen, over here, is now down .9%. in other words, the yen is strengthening. some of our guests on the program this morning, guys, said they're surprise it's not
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strengths strengthening further. they would like to see more action, more creative from the bank of japan if they're serious about shaking inflation. but for now, the main message because the bank of japan has gone and can done the big, bold thing. but is it bold enough? >> that would be heavy if it really was gold, all gold, kelly. >> yes. >> it's not, right? >> no, it is actually. it's worth millions. it's worth millions. >> you tried to walk down to the other side of the wall and i saw you get -- where is it tethered snch do you hear what we're playing? i think this is from "eyes wide shut." our audio guy has a really sick mind. >> i'm just glad that that is what you took away from the global markets report, joe. >> it's always something like that. kelly, thanks for playing along. you've been bad and you're going to need to be punished.
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anyway, thank you. we'll see you a little bit later. >> kelly has actually been very good. >> she has, since she's been bad she's going to need discipline. >> all right. she mentioned that -- >> you're wearing black, too, aren't you? >> i am, but no -- >> yeah, exactly. >> good luck trying to pull me back with this one. kelly mentioned that everyone is going to davos this week. the world's most powerful leaders in government are gathering there in switzerland. this is the annual world economic forum. group's founder is warning that the world has not yet escaped the risk of economic collapse. this is for business and government leaders to focus on what he calls cautious realism and recovering public trust to try and avoid another major crisis. >> i think what the world expects is that someone with a major crisis takes the lead and i'm very hopeful that the united states in the second mandate
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will assume its responsibility as the strongest power in the world. >> andrew will be reporting live for us from davos. i believe he is there today. >> a wardrobe thing? >> no, no, no. >> his sweaters are probably going to be part of this and turtlenecks. >> yes. >> chic jackets. >> you need warm changes every day. >> that's what i mean. i can't wait to see what he goes with. >> he's had some interesting hats. >> hats, too. you never know. coming up, why phil mickelson is warning that he might need to make drastic changes, even hinting at retirement. and it has nothing to do with his swing. plus, we're going to head to d.c. on the morning after the inauguration festivities. john harwood, probably hung of, but he's going to join us with the latest on washington getting back to work. think debt ceiling when we return. [ male announcer ] this is not my home.
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welcome back, everybody. the s&p is indicated slightly
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down as the is dow jones. the nasdaq is staying higher. we did hear from dupont which came in with better than expected numbers and ta dow component is up by 1% at this point? >> if you split the bid and the ask, it would be. >> 1.4% from the free market. >> our headlines this morning, a tropical storm intense fieging off of australia's coast. it's bringing nearly half the world's iron ore trade to a halt today. right now, let's get today's national forecast. reynolds wolf joins us from the weather channel. reynolds, it's great to see you this morning. >> great seeing you guys, too. the story down under is the extreme heat they're having in parts of australia. meanwhile, in the northern hemisphere, we have a big wintry blast in spots. now the story in terms of the snow is going to be in parts of the great lakes with some places in upper michigan and northern michigan could be over a foot of snow.
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the same can be said from erie. that will be the snowfall from now through thursday morning. for much of new england, the story will be the snow. in the southeastern united states, still mild conditions holding in play. 70 degrees in orlando. 54 degrees in montgomery, alabama. out west, we see the jennings of a winter storm affecting mainly alaska and parts of canada. seattle will see some fog in the pacific northwest. mostly sunny for much of the west. let's talk quickly if we can about delays. here is how it's going to stack up. boston, snow showers in the early. you might have the back up, new york, basically the same deal but with some wind, and minor delays a possibility compliments of those snowflakes. back to you in the studio. >> yeah. we saw that, reynolds. yesterday, like today, i went out this morning and i saw the headlines about, you know, keeping the oceans from rising and healing the planet.
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i was freezing my rear off. it's not warming today, like 18 degrees this morning. >> that's always weird the way it happens. >> exactly. at this point, any type of change in the climate, whether it's warm or cold, rain or drought, snow or no snow, it's all climate change,ite? any change at all is climate change, i think, that's why it's called climate change. have i got that right? >> absolutely. but the big debate is is it naturally occurring or is it manmade? it's still out there. >> reynolds, i would give you a high five if i was there with you. amen, brother. amen. thank you. >> all right, guys. phil mickelson is warning of drastic changes because of his state and federal tax situation. mickelson lives in california. speaking after-sunday's humana challenge, said if you add up all the federal and state and disability, unemployment, social security, he lives in
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california. my tax rate is 62% or 63%. so i've got to make some decisions on what i'm going to do. mickelson acknowledged he could end up leaving his home state of california. he said the financial issues were the reason he pulled out of an ownership team that push chased the padres back in august. i like the back and forth that i saw in the papers about this. they point out he makes 40 million a year, so he should -- you know, i see certain people saying he should be happy with 10, how could he need more than ten? but the idea of paying two-thirds of your income -- and it's almost not -- it almost seems like it's in fees. >> 10 out of 40 is 75%. >> all right. >> well, what is it? 15 million out of 40. how do you pay 62% of what --
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and it's not like -- i mean, he has a lot of talent. he works very hard. he gets paid highly for what he does. >> part of it is problems with the tax code, too. >> it's confiscatory. >> i wonder if his changes are leaving california, leaving the country or if it's something even more. >> jae. john harwood had similar problems, although he's not in california. where do you pay your taxes, john? and what are you? are you a -- >> maryland. >> where? maryland? >> the state of maryland. >> you're probably a baltimore ravens fan, too. >> no. i mean, i'm happy they're in the super bowl. i like the harbaugh versus harbaugh thing, but the redskins are my team. that's where my heart is, man. >> and duke is back. are they number one sthp. >> yes. >> louisville lost to syracuse the. >> we're number one again, but we're not going to be the same
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until we get ryan kelly back. so we're going to have to watch that. that's the key to whether we go deep into the postseason. >> i got home yesterday and i turned on cincinnati was up six or seven over syracuse. they had just beat louisville. and you said, you know what? if i watch this they're going to lose, and they did. >> you're the curse. >> joe, who do you like in the super bowl? i want to get that out there first. >> i -- i -- i'm inclined to see the 49ers, but then i saw the ravens and the ravens and are tough and that guy is good. flacco is really good. new england is no pushover and they manhandled them, you know, to my chagrin. i was hoping for a patriots/49ers matchup. weren't you? >> no. i wanted the brother thing. but i can't decide who is the stronger team. i'm thinking baltimore probably. but we'll have to wait and see. >> yeah because, you know, atlanta showed me something that they didn't prevail, but they
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looked good. they were up 17-0. what can you tell me about, john, my fantasy, at that tacking to the center and the second term fantasy? i guess i'm going to have to just live with what's happening. that's not happening, is it? >> well, you know, the practical result of what he ends up getting out of the congress may be different than the vision he articulated. but i have to tell you, i was surprised at how assertive he was, how programmatic he was. he delivered a political manifesto yesterday, which is not what a lot of inaugural addresses are. usually there's more poetry in an inaugural address. it's a unifying moment. you're not talking a whole lot about programs or initiatives that you're pushing in particular, but he was. on liemt, which was notable because he didn't talk about
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that in the campaign. one of the things that fell to the wayside in the first at this term on gay rights. he tried to frame the argument about entitlement programs and programs serving the poor. and it was very striking, i thought, joe, the way he made a reference to this doesn't make us a nation of takers. you almost expected him to have a 47% reference that harkened back to the campaign. i think we can't jurmt underestimate the effect that the experience of 2011 dealing with the congress and then in 2012 what he felt was vindication in the election, how that changes his approach to dealing with congress and dealing with the country. it's going to be interesting to see how successful he can be. >> yeah. yep, yep. we'll see. you know, i don't -- you just
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don't want to push an agenda too far if it was still a pretty close election, john. we'll see. but i don't feel like -- >> well, it was. >> i don't feel like a whole lot of unity was headed our way. this is like throwing down the gauntlet and -- >> i agree with you. he was. and one of the dangers for presidents is that they get a little too confident, a little too cocky. we'll see whether he is reaching a little bit further than he can grasp. now, i willsy that what house republicans did last week on the debt limit was a promising sign for him in the sense that -- and i think he took it that way, which is that they -- at his insistence, he came out after the election and said i'm not going to play that game on the debt limit. in the end, they have broken the link between spending cuts and -- at least in the short-term -- between rising the debt limit and the dollar for dollar spending cuts.
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i think he is feeling that they have recognized that he won the election, that he made a set of arguments to the american people and they're recognizing the limits of their power and they're supporting the country. now, the question is how far can you push that? can you do it on climate change? i don't think so. i don't think you can get legislation through this congress on climate, although everybody is going to have to watch the use of regulatory authority, which is going to be the fallback for him when he can't get what he wants from congress. >> all right. all right. we've got to weeks to wait between now and two weeks from yesterday, we were going to talk about this a lot, john. we'll probably go back and forth five or six times. who is favored? is it pretty even odds at this point? we have to go. >> for the ball game? i don't even know who is favored. i'm assuming that san francisco is favored by a couple points, but i don't know. >> that's what i think. >> thanks, john.
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when we come back, we'll get an early read on the trading day ahead. we'll talk to the ceo ellen can you llman at 8el o'clock eastern. what are you doing?
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good morning, everybody. welcome back. we're getting numbers from veer rison right now. that number is coming in, fourth quarter, 38 cents a share. that includes 7 cents a share of negative impact about a because of superstorm sandy, because of those recovery efforts. what was the estimate, joe?
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>> i mean, the number that they're -- that we're seeing reported by reuters are -- i don't know whether that's yearly or what, but they're taughting fourth quarter of 1.48. >> fourth quarter, 38 cents. >> i saw that, but -- >> even with the seven cents back in, the estimate was 50 cents. >> this must have a lot on other stuff in it. the one that is sitting on the wire. we're getting some news from the company itself. but yeah, there is a -- does that include did they sell something or have a big gain? they might have. what did you -- >> 38 is what they say, plus the 7 cents. >> that is still below. >> below what the street would have been looking for and -- >> i doubt if they're going miss by -- you know, as stable a
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company as verizon is -- >> although the company is saying they were positioning themselves for growth in 2013. the story is the verizon sees opportunities in the fourth quarter to improve profits for 2013 means they probably threw a lot of things into this quarter to get themselves in better shape the next time around. some of the numbers that the analysts look at include what they're doing in terms of wireless. verizon added 10.3 million. >> revenue is also above. revenue is 38.5 versus the 29.8 estimate. the stock is called lower, though, at this point. it's down about -- actually, it's down more than what you're looking at up there. i've got a 40.94 bid. actually, a 42.05. >> down 1.6% in the free market. the numbers are things that people look at. wireless is the big one that people tend to watch. wireless added 2.2 million
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retail customers including a company report 2.2 million in the third quarter. buyout is the other thing people watch. for the fourth quarter, it added mortify yoes customers it had in the previous quarter, despite super storm sandy. >> i'm surprised analysts didn't have a better grip on exactly what the want was going to report. >> and that big loss number, it was impacted by items in both quarters and addition nol nonoperational debt items for the fourth quarter that just ended. it sounds like they were taking a lot of those things low with
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that they're positioning themselves low for 2013. >> i see now. the 1.48 i was seeing was a loss that they're reporting and that is because of a dollar 86 a share charges of 1.86 a share. $1.55 was related to pension and benefit changes and 31 cents due to the early retirement debt. so -- but it was in the year ago period, it was 52 cents. so we're talking about 38 cents plus seven cents impact of sandy. >> that 1.48 number was a loss which included includes a lot of different items. >> they messed that up, reuters when they posted it. >> no, i'm looking at that right now. >> it's a loss. >> all right. we've been watching other earnings that have been coming out today, another dow component, too.
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>> dupont up about 66 cents. earnings of 11 cents a share. we're going to talk to the ceo ellen kullman at 8:00 eastern eastern. let's head to the futures pits. had you fixated on the yen? anything happening in the yields arena that is that interesting, kevin? >> definitely the currencies are still where the action is. i think the big thing last night you saw the move back up, what we call up in the yen futures of 1.50, 1.75 higher. kind of an after the fact movement. but we can't keeping seeing these kieps of acute cross turn flukt yait yagzs and expect the debt and equity markets to remain as constructive and calm as they are. so, you know, that window can stay open for a while. but i think that those type --
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the term you're going to keep hearing is currency war. i can't really buy into that. but certainly this idea that you can move the pegs around that quickly and keep the other markets in line is going to end. >> so i'm trying to figure out what you're saying. the flux in the currency markets is going to be a negative eventually for equities? they're ahead of where they should be? >> well, yeah, not just equity once but bond markets, too. and i would say, yeah, we've been constructive, i would say, you know, that the market is probably a little bit fully priced to a little bit rich for what we think is going on elsewhere, joe. >> why should the yen affect whether i buy u.s. stocks or not? >> so it's not necessarily that. but the international capital flows are where we call factor account flows. and two weeks ago when i was on, i talked about how the yen was
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reacting now behind the bond market moves here in the states. those are factor flows. those are going to be the big -- what you call when you're running a merchandise trade deficits and current account deficits. these are the things that really matter. and they're just kind of big macros. so they divide them down to a single session or a quick abrupt move. but they're the real flows in the global economy that are going to matter going forward. >> yeah, all right. i'm staying long. i'm staying long, kevin. >> well, we think last year we gave it a bite on the cheek. but that's going to be a lot harder this year, joe. and one of the things you're pointing out are extremely high gdp. and so the big thing this year
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is to make the switch. the customers are now the employees. the employees are the future customers. so you've got to keep the growth and accelerate the growth in employment over the 1.25/1.50 that we're doing if we're going to keep the equity market going in the direction that it has been for the past two years. >> all right, kevin ferry. thank you. >> is that a phone ringing down there, kevin? >> yeah. someone is trying to get to their broker. >> it would ring and ring and ring. >> that must drive you crazy. >> robo call, i would say. >> they are trying to get to the yen. >> yeah, exactly. >> thank you, kevin. we'll see you again soon. if you have any comments or questions about anything we've been talking about here this morning, e-mail us, squawk@cnbc.com. when we come back, the debt ceiling spike. you've heard the doom and gloom warnings. but is there really a chance ta uncle sam defaults on the nation's bills? our next guest says, yes, there is. we'll find out why. ♪
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[ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it.
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. welcome back. u.s. equity futures at this hour down about 31 points or so is what we're expecting so far. making headlines, atari's u.s. operations filing for chapter 11 bankruptcy protection. >> oh, no. >> yeah. the video gamemaker wants to separate from its french parent company and that company is filing a similar motion separately in france. atari says the move is necessary to security investment in its needs to invest in mobile and downloadable games. >> that would be great, space
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invaders coming to my blackberry soon. >> missile command. >> i got the high score one time on pit fall. >> i used to be able to play asteroids as long as i wanted. there's a way to go up into the millions and millions. asteroids unfortunately mean a different thing to me at my age. >> need a suit cushion? >> announcer: this squad-ward moment has been brought to you by -- >> i don't know what to do, really. you have to eat more fiber or something. >> as squad-ward box continues. thank you, swroe. >> affidavsteroids. could the nation default on its debt? ow next guest says yes. joining us now is steven englander. steven, are you talking about a real default where we stop paying our bills? are you talking about where we pay our bills late? what do you envision? >> well, my views are much more
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conditional than that. i think the outcome of the defaults would be terrible due to the knock on effects of the economy. so i don't think they're going to do it. but what i would warned is that given the experiences of the middle of 2011 and last year with the fiscal cliff, the markets aren't likely to believe we're going into default until it actually happens. too many times when we've gotten fixes at the last minute. so i think there will be a sense of complacency. we'll have a real panic very quickly at that point. >> what would happen to the dollar at that point? >> weirdly enough, the dollar would rise. the first instinct when something like that happens in financial markets is are to cut the position.
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they would cut those positions and money would come back into the u.s. it's a signal that everybody was panicking. >> but the situation where we're facing right now where you could see the house do something like a three-month extension, we're not going to worry about this now, we'll wear about it come march, if that were to go through, what happens with the coral? >> i think that's likely to be a scenario. it can't be three months and you have to eat your whiteys. we've had the sequester kicking in. it keeps a lot of pressure on the feds to keep monetary policy easing to offset those shocks. the u.s. not addressing the
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long-term issues on the expenditure. i don't think it would give foreigners much confidence that the u.s. was coming closer to resolving the problems. >> i'm wandering to wonder the same thing. if we don't come up with a solution, then these severe cuts kick in. when is there actually a day of reckoning? >> well, to some degree, you know, because of the dollar safe haven status, we went from 2011, middle of 2011 to the middle of 2012 with the dollar strengthening, not because there was anything good happening, but because, you know, the rest of the world was on a risk off mode and we're selling off. i think the worst outcome for the dollar is actually kind of the one we have now where a lot of central banks are pumping liquidity into the world. and that kind of world, the dollar does poorly. and on top of that, there are doubts about the u.s. fiscal situation and above, you know, what is doing on the monetary policy. >> so you would be telling
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people the most likely case scenario is that the dollar goes down in the first half of the year? >> yeah. let's be clear. other countries are in the same boat. the uk with the stagnant economy, we're looking at japan using the exchange rates to depreciate. it's a g4 question. the big four companies and if you throw switzerland in the big five all face similar issues and they're all doing similar things. the dollar will weaken against currencies in emerging markets, will weaken against the smaller g10 currencies. but within the g-4s, it depends which one has the bigger problem at any point in the day. >> steve, thank you very much for joining us. >> my great pleasure. thank you. >> 47 million in 2012. he stays in california, tax bill is $29 million. so if he moved to florida, he would save $6.25 million. >> the tax bill is 29 million?
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>> 29 million out of 47. that's not bad. that's pretty good. but he could move to florida and keep half, basically keep half instead of keeping 18 out of 47. >> for a guy who is on the road a lot of the time. >> and then the asteroid thing, i saw what al rockier was able to -- he got a lot of mileage out of that story. >> so are you about to make a confession? >> it's not really true. today i'm feeling fine. coming up, i'm going to start being more open. >> more open? i know everything about you. >> to viewers. >> our viewers know just about everything, too. >> if i feel like i have to burp, i am going to -- >> you are not a closed book. >> could you be more open than al roker about something? >> probably not. >> probably not. so every little thing happens to me. >> oh, boy, viewers, look out. >> anyway, if you've ever been worried about what your boss -- uh-oh, i forgot about him.
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about what your boss things about one of your facebook postings, one of your tweets, don't worry about it. and then at the top of the hour, boeing's dreamliner will likely be grounded longer than many first thought. stay tuned. and having an investment expert like northern trust by your side makes all the difference. we add precision to your portfolio construction by directly matching your assets and your risk preferences against your own unique life goals. we call it goals driven investing. after all, you don't climb a mountain just to sit at the top. you look around for other mountains to climb. ♪ expertise matters. find it at northern trust. you name it...i've hooked it. but there's one... one that's always eluded me. thought i had it in the blizzard of '93. ha! never even came close. sometimes, i actually think it's mocking me.
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welcome back, everybody, we're in the chairs this morning. joe was just talking about a story that's out of "the new york times" today, saying that your right to speech, free speech, is still fully engaged when it comes to twitter, when it comes to facebook, even if it ticks off your boss. it is protected. this is according to some new rulings from the national labor relations board. there were a couple of situations, and the board is coming down trying to say that this is just an extension of existing law, making it apply to new technology. there was a case, his pan igs united of buffalo, a nonprofit social services provider where a caseworker threatened to complain to the boss that others, other employees weren't working hard enough. one worker, mariana cole rivera posted a facebook message saying my fellow coworkers, how do you feel? four other people came back with sometimes angry, expletive laden responses. what the hell, we don't have a life as is. try to do my job, those five workers were fired. for posting those things, and
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the nlrb said that that is not okay. that this is free speech, they're allowed to vent, as they called it, and it's okay, and they had to be reinstated with their positions. now there were some other situations where the board said this is not free speech. they cracked down where a newspaper reporter, a homicide reporter at the arizona daily star in tucson posted some things saying, what? no overnight homicides? you're slacking, tucson. and another began by saying, you stay homicidal, tucson. he was fired, and the nlrb said no, that's a situation where you can be fired. >> we're trying to imply that you can tweet -- >> you can't say anything. >> but you can tweet stuff about your boss. and it's different for us, because -- >> on air. >> yeah, being on the air. and being, i'm not saying everybody knows this, if we were -- there's a-list, there's b-list celebrities. where is -- is the alphabet big enough to find a place for us? we're in the back half. but, still being somewhat public i'm petrified.
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>> of saying anything? >> yes. see rupert said something -- >> that's why you don't tweet, right? >> that's why -- no. i do on the air, and you know, i sort of consider it as saying it. but you see -- but if you put it in writing and it stays there, it becomes viral. you see rupert murdoch said something about that full-figured gal that fell in to the -- i don't know. >> fell into the what? >> she fell into some hole but it saved her because she got stopped. >> out in l.a.? >> i don't know where it was. but he said something about, you know, how'd she get so fat or something. he made some comment like that and it immediately -- then he said i was just commenting on our eating habits in this country, that it's causing obesity and things. but he had to immediately backtrack. >> you've got to be careful what you say. >> you really do. and now, so i'm allowed to say something about our bosses? >> why don't you go ahead and try that out? >> i'll say something about -- you mean those guys in the corner office that we have no idea what -- >> oh, stop. >> see, i'm not going to do that. >> yeah, good idea. >> i don't believe that --
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>> that you're really protected? >> yes. >> this says you can't fire them. it doesn't say anything about where they can put you in terms of what hours they make you take or any potential raises down the road they give you. >> you mean they could put me on a show that starts at 6:00 a.m.? >> oh, yeah. can you imagine? that would be awful. you'd have to get up at like 3:30. >> how much worse could they -- you can't do that much worse. >> we do have programming starting at 4:00 a.m. >> yeah, we do. anyway, that -- >> so go ahead. tweet at your peril, though. >> you know, that we may see phil. he should come on at 3:00 a.m. we do the show at 3:00 a.m. in california. that will be a week from friday or two weeks from friday? >> two weeks from friday. >> anyway, coming up why shares of boeing are falling again this morning. plus a hedge fund titan who turned in returns of more than 20% last year. our guest host when "squawk box" returns. what are you doing?
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looking ahead on money matters. >> an economic recovery has begun. america's possibilities are limitless. >> can america's leaders rise to the fiscal challenges facing the nation in the next four years? we're following the money trail. seizing opportunities in the global economy. ppg exxon panel founder is here on where to put your money right now. >> and taxing times for phil mickelson. what he's saying that is shocking the golf world. the second hour of "squawk box" starts right now.
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good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick along with joe kernen. andrew is on his way to the world economic forum in davos. we've been watching the futures and other earnings coming in, too. right now we have travelers, which is out. that's another dow component, that's the third of four that are reporting before the bell this morning. travelers coming in with earnings of 72 cents a share versus the 14 cents the street had been expecting. that's an incredible feat. it is down from where they were a year earlier. it was $1.51 a year ago. that's because the losses from sandy came in and it was $689 million in catastrophe losses. almost all of that was from sandy, $669 million. the company, again, coming in at 72 cents versus the 14 cents the street had been expecting. partially because they have underlying margins that were better -- >> revenue is above expectations. $6.48 billion in revenue. property and casualty insurers are notoriously hard to -- >> figure out.
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>> to analyze and to predict. you can see the analysts weren't even close. >> that underlying underwriting margins, i wonder if that's because they were able to raise rates because of sandy or if it's too soon to be looking at that? again they're getting better numbers than the street had been anticipating. the losses from the storm, that's something that a lot of people will be looking through. they're saying at this point $669 million after tax. it was $1.024 billion pretax. and that compares to losses of just catastrophic losses of just $6 million after tax from the year earlier quarter. take a look at travelers this morning, you'll see it is indicated up by about half a percent. this comes after we saw from some other dow components this morning, du pont coming out with its fourth quarter profit, 11 cents a share. when you strip out certain items and that is four cents better than the street had been expecting. revenue for du pont also beating conseine tess. we'll be hearing more about that quarter when the ceo joins us in the next hour. that stock has been trading higher. verizon came in with 38 cents a share and profits for the fourth
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quarter when you stripped out certain items. that was a little short of what the street had been expecting. street was looking for 50 cents but 38 cents included seven cents worth of negative impact from superstorm sandy. but that stock is indicated down by about 1%. you add it all up and you'll see the futures this morning looking a little bit nexted at this point. you can see right now the dow futures down by about 22 points. s&p futures down by 1.8 and the nasdaq turned negative, as well, down by less than one point indicated to open lower. in our other headlines this morning, japan unveiling what its prime minister calls a monetary regime change. it is raising its inflation target to 2% and starting open-ended asset purchases a year from now. this is all part of an effort to try and kick-start the japanese economy. >> all right. i'm just looking at these different, you know -- different revenue numbers on trailers. we put up a totally different one. i thought that was net written premiums what we use for
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revenue? >> 5.28 -- >> and that's what we use. because the overall revenue that they get when it comes out was above that. but i don't think -- maybe you don't -- >> total revenue is 6.477. 5.385. >> so the analyst estimates are for revenue as based on net written premiums apparently. the dreamliner is likely to be on the ground for longer than originally anticipated. phil lebeau is here with the latest. what do we know, phil? they're checking out these batteries, i guess. why does it seem like it's going to be longer now? >> well, remember, last week when the grounding was announced at the time boeing said, listen, our engineers are working with the faa, we believe that perhaps we could come up with a quick solution, that could convince the faa the planes are safe, put them back in the air, perhaps early to mid this week. that was the original goal. well now when you look at what's happened over the last three or four days it's pretty clear that the drama roevolving around the dreamliner it's been extended.
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first of all the flight cancellations continue to grow. a&a, jal announcing cancellations through the 28th or 29th. boeing is not slowing production, even though it is officially halting deliverlies of 787 dreamliners. here's the issue. they have come up with different finding for the burned batteries. we mean the investigators in japan and the u.s. first in japan. investigators there say the a&a battery received too much voltage. that was the emergency landing dreamliner. the investigators visited the japan firm monday that makes the dreamliner batteries as they try to figure out why did that battery get more voltage than it was supposed to get and was that the cause of this? take a look at the stock of the battery firm. they confirmed yesterday they were talking with investigators. compare that with what we saw from investigators looking into the jal dreamliner flight in
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boston, the fire there. they say that the battery in this case was not overcharged. now today the ntsb investigators will be in arizona visiting the secure plane facilities. that is the company that makes the charger for the battery, as they continue to figure out what happened in this case. in both cases if you take a look at shares of boeing which are likely to be under pressure today as it's clear that this investigation is extended, becky and joe, the bottom line is this, you're looking for commonality in the two failed batteries. in one case they say it was overcharged. in another case they're saying it wasn't. that's looking more and more like an indication that they don't know exactly what happened here, and as a result, figuring out a solution is going to take a little longer than originally anticipated. >> phil, we were talking earlier about how the stock has started to break down a little bit out of that trading range where it had been earlier. >> right. and the thing you want to watch, becky, the thing you want to watch is when boeing, if boeing says we have to slow down our production schedule. because that's the key. once that happens, if that
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happens, then you're going to see wall street and investors say, okay, now we're a little more concerned here. >> yeah, we've talked last week with you, phil, and i believe mike boyd in talking a little bit about the 747 and the troubles it had. was that a situation where they had to flow down production or were they able to correct it more quickly? >> i'm not sure how much they had to slow down production. that was so long ago it's hard to remember exactly what happened. you're looking at a much more intense situation here because you're ramping up production of the 787. that's a big part of the estimates that wall street's looking at for boeing this year. starting at five right now per month and going up to ten per month. if that doesn't change, then you're going to look at most investors saying, oh, well they'll get through this. if they have to change that it's a totally different ball game. >> phil thank you very much. we'll check back in later. >> hewlett-packard narrowly missed an opportunity to back out of buying autonomy. "the wall street journal" says that auditors spoke with hp days before the acquisition went
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through, and told the company about an allegation of improper accounting at autonomy. but the auditor said that they found the allegation had no merit. now the article says that hp executives on the call did not pass the mention up the food chain to the board or to the ceo. had almost written off the whole acquisition. meantime the "journal" reports that hp exceeded a board established limit on how much to pay for autonomy and the board's finance committee reportedly did not follow its normal practices in approving that deal. >> our guest host this morning is one of the best performing hedge fund managers of 2012. joining us right now is dena carsing. he is the founder and ceo of the hedge fund ppg axon which closed up 20% according to an investor. great to see you. thanks for joining us today. we've been watching earnings that have been coming in this morning trying to get a feel for what the overall economy, not
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only in the united states, but also in the globe is going to lk like this year. earlier this morning, ellen coleman was out with du pont. she says she's looking at what she's considering something that's going to be a slow growth world economy. is that the sense that you get from looking around? >> i think the good news when you look back is that the world's not ending, and investors were positioned as if it were. so i think much of the rally at the end of the year and this year has been a reflection of the fact that things are settling down a little bit. bad news is there's no easy solution. there's no big recovery coming out of this. so we see a lot of restructuring. and i think there are some good parts, some bad parts. i think it spells a lot of variety in earnings. overall i think it's going to be tough for s&p companies to earn a lot of money and grow rapidly going ahead. >> which means it's also tough for investors to find easy ways to make money. >> the good news, if you look across global markets, every month we look at valuations of each sector, each country and stare at them and see how they're doing. pretty interesting.
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more than any point in years, almost every region is right on top of each other in valuation. so europe, japan, u.s., all within a point -- >> what's your number in the u.s. on the s&p? >> give or take off of current numbers, it's about 12 times, 12.5. >> times dinakar. it's time for the s&p to go to new highs. >> joe, the only thing -- >> tell me. >> here's the good news and the bad news. >> it's not that i care. >> if you look at the last 20 years, average multiple is higher. average multiple -- all good stuff. three sectors make up almost the entire year or more of that undervaluation. health care, tech and energy. right. why health care? because the golden days are gone. health care is going to have a tougher road ahead. decent sector but merck's not trying 20 times earnings any time soon. technology, there's revolution under way right and i think as a result you can make a bet on apple, google, et cetera, but
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there are reasons why they trade where they trade and so the world of 20 times multiples for large cap tech stocks will challenge as well. and energy, oil is at 100 not 20. >> but another revolution in energy too, right? >> but it's a bit of -- there's a lot of volume. not much profit. the market ultimately you can see why some of the sectors that drag multiple down are where they are. doesn't make it bad. but does it make me think that multiples just bottomed out? not so sure about that. >> yeah, you wonder whether you see multiple expansion in either one of those last two. in health care it's hard to -- it's going to be continuous cost pressure and then energy we just saw, climate change is the biggest thing that he talked about yesterday. i mean i wonder if you worry about hydro carbon build-out now, or whether you believe it or whether you think congress will stop any actions that slow that down. >> the funny thing is, you're talking about airlines and
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building. the one common thing that people in boeing have in common with energy companies is that the new thing you make is a whole lot more expensive and complicated and very risky compared to the old thing you used to make. that just means your quality of earnings is going to be a little tougher for the next decade than in the past decade or so. not a bad thing. >> do you think profit markens which are at all-time highs, do those come down, since we're only at 12 times earnings -- >> i think they are coming down. we're seeing that quarter by quarter the last few quarters and so i do think that the big wave is gone. in the last year, you already saw top line slow down, the companies use balance sheets to go and help bottom line. but, at some point that's already working. so i think at this point margins are coming down. again -- >> multiples might go up. or might go up enough to overcome that? >> depends on the sector. again, i think -- >> bearish on the s&p for the next year? >> i -- we were -- on equities. right now i'd still say negative on credit. i think it's okay. i think you just had a great two
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months. and you don't tend to get great two months over and over again. look, i was in asia during the asian crisis and i remember that go to japan, and we always hear from strategists why the nikkei should go up a lot, because rates are really low and the discount level said that you should get high multiple. >> you're comparing -- >> -- one way which is that when rates are really low it's usually for a reason, right? you don't get your cake and eat it too. you're not going to get robust profit growth and low rates. one of those two is going to break. i do think for an equity investor you're better off for credit by a mile. if things settle down and are okay, rates start pirking up over the back end and you've got to factor that in over the multiple, too. it feels fine to us. >> the good news is rates may actually come back. at some point say we're back and the economy is growing again? i'm looking for the silver lining? >> i think one way or another rates go up. because ultimately we're not in this low boring world. if rates stay low if the economy stinks, and governments can't get revenue to go up, rates have to go up one way.
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and if things are great, rates go up another way. either way rates go up eventually. >> for a good reason. >> at least it would be nice to get something in -- when you have -- wouldn't it? >> the good news is, investors are positioned for very bad stuff a few months ago, and so the starting point for companies and investors has been a lot of caution. as a result, things settled down means people get back to business and spend some money. >> dinakar is going to be with us the rest of the program. we're glad you're here. great to see you. when we come back, a review of the president's inauguration and what it means for the markets. we'll take a closer look at the issues he speak about, and those that he didn't speak about, too. and later, taxing times for phil mickels mickelson. we'll have his comments that raised some eyebrows in the golden state.
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and washington getting back
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to normal today, after president obama took the oath of office for his second term. jared bernstein, former chief economist and economic policy adviser to the vice president, and senior fellow at the center on budget and policy priorities. he also is a cnbc contributor. also here is chuck gabriel, managing director at capital alpha partners. these notes that i saw from last week were the question is going to be whether the president transforms himself into a pro-growth, pro-market president. did you write that before you saw that the address, or did you see any indication that that's the way he wants to head now? >> none at all joe, unfortunately. a lot of us, me included, got caught up in the moment. it was really a great celebration of racial unity and the moment with, you know, the first black president, in his second inaugural. but, where some might have been looking for an olive branch to republicans, i think a lot of them felt that it was a stick in the eye.
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frankly, he may a very spirited defense of activist government and kind of continued this narrative that, republicans don't believe in social security and medicare, et cetera. so, you know, we go on a very cold tuesday morning and we soldier on to the next battle. >> and, the -- there's an inauguration -- there's speeches, and then there's what you're able to accomplish given the -- the tone -- the makeup of the country, the makeup of congress. how much gets done? how much is just bluster? and how much actually ever gets proposed? but then again, how much is executive order? is he going to be able to do that without legislation some of it? >> well, again, now we get to wait for a state of the union on february 12th, and we probably won't see his fiscal 2014 budget until march. we'll have to deal with the debt ceiling and probably at least the sequester before that. so you know, there are not a lot of proposals formally on the table from the democrats. and i think we're going to have
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a very, very messy march and probably into early april, maybe even with a government shutdown, and initial sequester. but eventually, one might hope that they're going to be forced in some sort of balance of a deal with new revenues and spending that jerry and i were talking about yesterday. >> jerry, as hard as it is for a centrist to look at when the president would be subjected to criticism from the far left, and i saw it for four years, that this guy let us down. matt damon, whomever, any of these clowns, that thought that the great progressive mantle that he was given had been left behind for four years. given the speech are they now going finally, this is what we wanted all along? at least from the rhetoric they must be satisfied from that speech yesterday. >> i think that's right. and i think i'm hearing some of that kind of sentiments expressed by people who were kind of looking at the president and the kind of things he talked about yesterday, as we've been waiting four years for this. i do agree with chuck that there wasn't a lot in there about
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growth and markets, but it was a speech that was very much about the role of government, particularly in the lives of people who, you know, very arguably, need government the most, just so they can get a fair shake. and in that sense i thought it was a very strong, yes, a progressive speech. but i thought one that resonated. >> but jerry, given the amount of divisiveness that we already found ourselves in, and i guess, i don't know if i call it a close election, but there is still probably i would say 47, there's that number again, 47%, 48% that really thought that the progressive agenda had gone too far already. to come back with such a rousing defense and then all these new proposals to even extend it, what does it -- is that the right move to try to bring the country together in terms of unity? i mean that's certainly not what bill clinton did. >> well, it is in the following sense. i think that the divisiveness you're talking about has a lot
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more to do with the kind of arguments that chuck was referencing, and those are obviously going to be problematic going forward. but if you actually look at poll after poll you find that the vast majority of americans are actually very sympathetic to gay rights, to equal pay, to, you know, anti-discrimination. even to gun control. so, i think the kind of unity that he was talking about yesterday was actually, again, very resonant. you didn't hear him talk, and interestingly he talked more about this in his first inaugural speech, about unity with republicans. unity with people who oppose him. i think here he's reached his hand out many times to have it slapped away. now we are going to have to figure out a way to move forward, just as chuck says. and actually there are a few sort of semipositive signs on that front lately. there's been a couple of arguments that have been resolved -- >> but chuck, there are some people that are disturbed by not only our spending, but the growth and the size of government. the growth in the number of people dependent on government.
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and i mean, they're not going to be happy about what they saw yesterday. >> well, again, exactly. that 47 really is 49% of the -- of the population that somewhat dependent on some sort of transfer -- >> they can be for gay rights. they can be for immigration. they can be for all these social issues but they can still be looking at the lack of pro-growth, you know, private sector initiatives, and possibly even more headwinds that with climate -- i don't know what he can get done with climate change. nothing there really was trying to get to 3% or 4% growth. it was like trying to make do with 2% and expand the government. >> let me just say -- >> chuck -- >> one last point. i mean, really, the international message of that speech yesterday is that, you know, we are gone, and i think, in a irretrievable way now we're moving towards a government that will take about 23%, 24% of gdp. >> and we're going to pay for it.
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we've got to go. we only got ten seconds. maybe we did see that. >> i just want to -- >> we're going to push the taxes up to where we can afford 24% of gd just want to know why joe, free market guy, sauce asking the president what are you going to do for growth? i mean i think what he's going to do for growth -- >> get out of the way. i just want him to get out of the way. >> i hear you. >> but i'm not hopeful. anyway, thanks, jerry. thanks, chuck. sorry. >> when we come back, we've got more tax talk for you. "squawk" will be right back. at 1:45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work, how will he pay for his living expenses? aflac. like his rent and car payments? aflac.
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what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at getwellduck.com.
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>> all right we'd like to continue the "squawk" conversation this morning. we've been listening to you, watching your tweets coming out. we'd like to wish a very happy
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birthday to rich coyle, his wife lisa wrote in and asked us to do that. if you have any other comments, questions, about anything you've seen here on the show this morning, e-mail us at squawk @cnbc.com. when we come back we're going to talk more about phil mickelson and his tax talk. it's the buzz of the morning. we'll have that story right after this. and at the top of the next hour, du pont ceo ellen cullman joins us to talk about the company's quarterly results out earlier this morning. du pont is indicated higher this morning after beating expectations. coming up the dow transport near historic highs. so is now the time to climb aboard, or is this train already left the station? we preview some key earnings, and talk about the sector in just a bit. [ wind howls ]
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good morning, everybody. welcome back to "squawk box." we've been watching earnings this morning, and there is quite a parade. dow component travelers coming in with 72 cents a share for the fourth quarter. that killed expectations.
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the street was only looking for 14 cents a share. the big beat was driven by a substantial improvement in underwriting margins. it did have big numbers, catastrophic losses from sandy. but again the underwriting margins were better than the street had expected. that stock is indicated higher this morning. >> new high. >> also verizon coming in a little bit short with fourth quarter profit. it came in at 38 cents a share. strip out certain items, analysts had been looking for 50 cents a share. verizon's margins were hit by the introduction of the iphone 5 which was a product that it actually subsidized. >> that's going to be down. >> that's going to be down? >> about a dollar. >> also fresh read on the housing market a little later this morning. the national association of realtors releases december existing home sales at 10:00 eastern time. could be up 2% from the november level. >> phil mickelson is warning of drastic changes he needs to make because of his state and federal tax situation. he lives in california and speaking after sunday's hume nan challenge he said if you add up
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all the federal and you look at the disability and the unemployment and the social security the state, my tax rate of 62% or 63%. and i've got to make some decisions on what i'm going to do. he acknowledged he could end up leaving his home state of california. he also said that financial issues were the reasons why he pulled out of an ownership team that purchased the san diego padres back in august. mickelson has promised to address the issue in further detail at this week's farmers insurance open and it's rare that, you know, golfers usually, you know, they say something controversial, it's about, you know, about a putter or grooves on your wedge. >> or tiger. >> yeah, tiger. >> controversial himself. >> he didn't really say them. it's sort of things that happened. >> all right's get back to our guest host dinakar singh. tpg-axon founder and ceo.
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on friday, maybe it was thursday, we talked about whether the new normal was real. and whether it was something that we're still in the midst of. growth would solve a lot of our problems. 2% growth or 1% to 2% doesn't solve any of our problems. are we stuck at 1% to 2%? >> i think, for the near term, i think we're probably, maybe it's 1% to 3%, something like that. >> is it self-infrikted? >> you know, i think there's just -- >> from what? >> there's good news bad news, right? we know that starting now -- start to cutting back there's no way they can't. that's bad news. good news headline a couple weeks in "the new york times" was california might have a surplus this year. optimistic, probably won't. but still that's nearly a miracle, right? florida, same thing. so, the states have been radically cutting because they had to. they're largely flat-lining this point just as the federal government steps up. so this is what you're going to see going forward. some areas that have to really
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go and change a lot. other areas that have gone through that change. the seesaw is going to go back and forth. i think there are growth sectors in the economy where things are going great. other sector where it looks like it's going to be tough. i think it's going to be diverse and mixed. >> how are we going to haveish did-what austerity will we allow to happen to us? bee don't seem to want anything to happen to us. >> yeah. you know, markets will inflict that upon us one way or the other, right? you're seeing the first -- not as long as the fed's buying $85 billion worth of bonds every month. >> i think for better or worse when you look at the last month or two, starting for example, really now, you are seeing some tax revenue kick in, right? and at every level. unemployment and payroll taxes going away the lower income consumer got hit. and is going to get hit very directly in this few months. and guys have had tax rates go up, that's a change from before. last year tax rates were stable and it was companies fulling back worrying about the cliff. now you're seeing the reverse a little bit. so people are nervous about
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companies like dollar general when they were worried about capital discount companies six months ago. >> we got something on the tax revenue side. what makes you think that we're going to get somewhere on the spending side? i mean we just heard basically a speech that said we're at 24%. and i'm not uncomfortable with 24%. i'd like taxes to be raised to where i can cover -- i want -- i like these entitlements. people want them. and i'm going to pay for them. will that be okay for growth? >> yeah, look, i think -- >> you'd be okay if we had a permanent 24%, 25% of gdp percentage of gdp on government? >> i think first and most i don't think we can run, 7%, 8%, 10% definites indefinitely. getting that down is the most important thing. >> so if we paid for the 24%, is that okay? >> if you had to, i would prefer to have higher tax rates and lower deficit. i think in the long run it's a bad outcome. i came to this country with my suit case, my family did at least, and opportunity was why they came here.
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there are two parts, because there's growth there's opportunity. and in one generation this is the only country where you can actually really make a claim. on the other hand public schools and scholarships are how that opportunity came about for me right? and both things matter. so from my perspective i think we need to be careful not to scare people off. i think if you're a ceo, or you're a wealthy investor globally and you have a choice, if people -- you might choose to stay away. the only good thing for us and this is going to sound ridiculous to say but it's true, it's not as if you have better choices right now. there are no parts of the world where a ceo is going to stare at the tax code an expect it's going to go down a lot. so i think the bad news is as dysfunctional, the good news is it's actually not necessarily worse -- >> if we don't do something with our entitlements we're going to be not at 24% or 25%, we're going to be at 39% within 20 years. >> yes. >> no one wants to do -- we had john kenneth on friday and you
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said 130 into medicare and you take 450 out. is that okay? he goes, yeah, that's what people need to do and the government's got to pay for that. there are people that think it's okay that our children are going to be paying back foreigners based on a $300,000 shortfall in what they put in to their retirement and what they take out. >> but we all know the math which is that entitlement issue, especially later in this decade, gets out of control. and so sometime in the next six, seven years people have to -- >> but we're told republicans hate medicare and social security just because they want to try to fix it. >> you know, i think it strikes me that the most obvious deal we're going to strike at some point some day is going to be to go and start putting in things like qualifiers on medicare -- >> raising the age. >> the funny thing from investor p perspective, we have hospital stocks. single digit earnings multiple. when people you look at health
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care stocks multiples have really compressed. and investors are saying there's going to be very little revenue growth going forward. when i look at budget projections, it's the reverse. people are saying revenues are going to grow rapidly and cost for health care is going to keep on growing. someone's right or someone's wrong, right? the health care investor is looking at a world of low growth going ahead. the government budget analyst is looking -- for me the one way to go and offset my medicare risk -- own hospital stocks. but i do think that -- i think costs will eventually have to be part of the equation because you -- >> you look at a very few numbers like 20 to 25 stocks. >> exactly. >> all right so we just talked about community health. you're with us for the rest of the show. we're going to talk about some more. >> you carried interest should go away in your view. >> i think it's part of a overall solution, sure. >> okay. >> again, if you're the only guy, you don't like that very
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much. the concern if you're a very progressive -- eight points in the last number of months. and i wish i could say that the world is a better place for it. that our problems were solve and we're really getting a big -- >> we're not going to use it to cut the deficit. we're going to use it to expand entitlements. >> and that's the problem. >> i know. all right. up next, planes trains and automobiles. we're going to take a look at the dow transports and find out if there's more upside as the sector gets ready to report earnings. check out the transfers over the past four months.
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welcome back, everybody. take a look at the futures. right now you are looking at a mixed picture. the dow futures, s&p futures indicated slowly lower. dow futures down by just about 10 points. nasdaq slightly higher up by 1.4. we've got a number of dow components reporting this morning. verizon out with earnings. that one is indicated lower. trading lower in the free market after it missed expectations. travelers and du pont are trading a little higher after they both beat expectations. we're still waiting upon johnson & johnson this morning as well. >> dow transports have been surging lately as you've seen. the index is up nearly 14% over
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the past two months. and is leading the gainers so far in 2013. so is there still room to make money or has the train already left the station so to speak? joining us now senior research analyst at avondale partners. it must be on the idea that the globe is shaking off some of its doldrums because oil prices are still, you know, above 90 dollars and yet transports are at a high. it must just be on the notion that growth is accelerating globally. >> that's the notion. certainly you've already pointed out we were oversold. we were planning for doomsday. some people have to get especially at the beginning of the year, okay i've got cash, let's get reinvested. you saw that the marquee names were first. j.b. hunt, union pacific, we saw fedex move first. and then now we're starting to move into a little higher risk names. but the underlying goods doesn't confirm it. so i look at truck tonnage. truck tonnage was less than 1% growing, now it's contracting.
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car loading and the rail space and unless i'm talking about the oil, balkan related fracking related activity they're contracting. ocean containers contracting. there's nothing out there other than those things directly related to e-commerce because that is a real trend or those things directly related to fracking that are confirming it. >> is that because -- all right that's not fiscal cliff. we're not just measuring the last month or two. >> we're measuring actual, real things. >> so is it the austerity dinakar's been talking about? tax rates are going up around the world. >> we call it austerity in europe what it really was they raised taxes over there. >> you're reducing consumer income. so if you raise consumer taxes by 2% you've reduced consumer income by 2% which means you're going to reduce consumer spending. >> we heard china is doing better, europe is also the front burner. why are you seeing the contraction in these numbers? >> because you're seeing less consumption and less production.
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less prosperity. >> from the austerity from the higher taxes? >> that's at least part of it. and also just caution. you know, you see -- you go through space by space by space and they're just unwilling to make those investments. >> in the past, and i hear j&j numbers in the past the dow transports hit a new high and it's not confirmed by the industrials, then that signaled that we should have a pullback. >> yes. >> do you think we're going to see that situation? >> i believe that is the case. because let's face it, if the dow -- if the transport went up by 7% every month for the next 12 months, then, the dow is going to be at, what, 23,000? >> that's okay. >> which none of us expect. >> we want it, though. >> well that would be nice. but you know -- >> but it would only maybe get -- it's $1.19 a share when you strip out certain items. that is compared to $1.17 the street was expecting. so a slight bit. they had special items that were
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in there. again $119. >> revenue is a little light. 17.6 versus 17.67 estimate. >> the company is also talking about the outlook. >> 535. >> to 545 which is blow >> 5 4r9. >> so we'll take a look at some of these numbers. they talked about solid results for the quarter, even though, they looked at sales momentum in many parts of the business continued sales momentum in many parts of the business. but again, at this point that stock is down by about 1%. >> the new guy, isn't it? >> yeah, that's right. new ceo. >> and that always begs the question whether they might set themselves up for a little bit better ruts down the road sometime. >> alex gorsky is the new guy. maybe that was a little concerning though. a little be >> a little bit below where the street is. you don't know whether it's below the previous guy from j&j. but they've got all those quality issues they're dealing with. it's been less of a story about products, and things like that, than it is cleaning up some of the stuff that the -- all right.
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so where we were? yeah that would be bad. we don't like it when the transports, but what would the dow have to do just to confirm a new high on the transport? wouldn't have to go to 23,000. >> no. but the point being that the, you know, dow transport theory is that if the dow moves higher and the transports don't confirm it. >> yeah. >> or the dow moves lower and the transports don't confirm it. it's not a problem. >> but it's not that the transports move first and the dow needs to confirm it? >> no that would be like saying that the rioting in greece because michelle is over there. you know what happens you is hear that there are riots, and you send her over to confirm it. it's not that they're rioting because she's there. >> then you wouldn't be -- you think that the transports right now are for some reason they're up here but no good reason. >> it's not that the stocks are somehow omniscient, they're a reflection of the underlying goods flow. >> is there any of the groups in
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the transports more vulnerable? rails are still pretty good, right? >> we have the truckers rated underperform. >> the truckers are where you're worried about -- >> i'm worried the most there. quite frankly we're seeing 6 something percent cost inflation get improved margin wer. out of that? very difficult. very difficult. least worried about certain segments of rail union pacific in particular simply because they're a great ben rush i of fracking and the research the chemical research. >> okay. we'll -- be a little less bullish maybe just listen like you said, we'll keep that in mind. thank you. >> thank you. >> all right. when we come back on "squawk," the ceo of chemicals giant du pont is going to talk business innovation and quarterly results with us. that company out with earnings a little earlier today and that stock is trading higher in the free market. plus, a preview of google's earnings and what you can expect when the company reports after the bell. "squawk" will be right back. ♪
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take a look at a couple of stocks to watch this morning. we'll start with research in motion, rim considering a strategic alliance with other companies once its new blackberry 10 models have been launched. the ceo told germany's newspaper that an option being considered that that is an option being considered along with possible sale of the company's hardware production unit. stock was trading higher. and brinker is reporting second quarter net of 50 cents. that was right in line with expectations on slightly lower revenue. >> verizon also out with fourth quarter profit. 38 cents a share, below the 50 cents the street had been expecting. the numbers were impacted by yoi phone subsidies as well as superstorm sandy. on the "squawk" news linee have james radcliffe of barclays. >> good morning. >> what do you think of these numbers, the bigger problem the iphone subsidiesubsidies, or th surprise zane? i would expect that analysts would have thought there would be something coming from sandy. >> yeah, we had something from sandy in the numbers.
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the overall numbers ended up being pretty much where we expected them to be. wireless margins were a little bit lighter than expected. but they added more smart phones than we forecast. you trade those off and they came in roughly in line. when you include the impact of sandy, they were pretty much in line with expectations. >> this is a situation where it's more iphones than you expected is that good news or bad news? >> in the longer-term, higher smart phone rates are good news because they drive higher roi customers tend to be stickier. there's higher up front costs associated with them. looks like mainly in the quarter the number of customers switching to become smart phone customers wasn't just existing smart phone customers upgraded more rapidly. it's existing nonsmart phone customers moved to smart phones. >> maybe that's good news. right now the stock is trading down 2%. would you recommend people buy it as a result? >> equal weight on the stock. i think there's some upside to it. verizon wireless is a great business and wire line is more
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of a mixed business. the upside is modest but certainly a solid, robust company. >> is fios a great business? >> fios is an excellent product. the long-term returns on the fios business, i think, are still up for debate and will depend tremendously on how much cost they can take out of the network when they can shut down the copper network. >> it's good for them. but, is it -- i just look at comcast and cable and a lot of times i see their metrics in terms of churn and who they had. cable still is a great place to be, isn't it? i mean, i hear fios, some people like it, i don't know what do you like, like the quality of it? >> my old provider used to be -- >> right, right. >> used to be comcast. i mean, used to be cable. >> is it a better product? is it a better product, james? >> i think it certainly goes head-to-head and fully competitive with anything cable can offer. i mean cable is taking share rapidly in areas where there
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aren't fios, where they're facing traditional lower speed dsl products. >> okay. >> james, while fios has been a fantastic business in the u.s. would you worry about sprint becoming more aggressive competitor and disrupting the two-horse race so far? >> i think sprint on the margin is a more aggressive competitor and better funded competitor. but i don't believe sprint or soft bank are intending to try to destroy the business model in the u.s. or get extremely aggressive on pricing. that churn is coming down in the u.s. market due to growth of family plans and attempting to rapidly grab share through aggressive pricing is likely to be a loser for the carriers that would attempt to do that. i don't expect to see that happen. >> james, thank you very much. great talking to you. when we come back, due month chairman and ceo ellen kullman on the company's latest ru9s. we'll talk about the chemical business innovation and what the company is hearing from some of their biggest customers. also take a look at the futures as we head to a break right now.
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dow component du pont reporting earnings at 11 cents a share topped estimates and revenue was roughly in line. chairman and ceo ellen kullman will join us first on cnbc. house republicans seeking to extend the debt ceiling and fight another day. >> better luck next time. oh, sure you can't win them all, you know. >> if the bill passes march 1st becomes the new deadline to watch. that's when drastic spending cuts are set to kick in automatically, unless a debt agreement is reached. we'll ask the ceo of cowan and company if the delay would help or hurt the market? the third hour of "squawk box" begins right now. >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick. andrew ross sorkin is on assignment in, i think it's davos. isn't it? >> davos is how they say it. we say davos. >> they say davos?
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oh, never mind. he's in davos. he will join us tomorrow with the latest from the world economic forum when becky goes over there she gets stockholm syndrome so badly. >> that's why you won't let me go anymore. >> and sorkin is already basically a socialist, so being over in europe, he's going to end up, who knows, maybe he will actually be, could it be -- influence would be more or less? >> it's hard to keep it -- >> you don't even have tv in the rooms, right? >> you're not in your room. you're out sourcing all the time. >> doing what? >> sourcing. >> is that a journalist thing? >> drinking. >> oh, i like that. our guest host this morning, dinakar singh founder of tpg-axon company. you ever used to go to davos? >> that's not my thing. there's work to do in january here. >> okay. >> we'll be talking to him in a minute. first becky has the headlines. >> some of the corporate headlines this morning, there are some more developments in the boeing story. at this point there are indications that the dreamliners
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could stay grounds longer than initially anticipated. the investigation is turning to the maker of the lithium-ion batteries used in the planes. gsy-usa, u.s. and japanese aviation safety officials visited the batterymaker in kyoto, yesterday. we've been talking about this with phil lebeau and watching the stock. shares of boeing are indicated down another 1%. they're breaking below that mid range. 74.27 is the last tick. also in some global market news, japan's central bank promising to pump unlimited stimulus into the country's economy. policymakers are trying to fight the threat of inflation and generate growth. the bank of japan hiked its inflation target to 2%, and said from 2014 it would adopt an open-ended commitment to buy assets. as a result the asian stock markets, take a look right now, japan the nikkei actually ended down by a third of a percent. the shanghai kos just over half a percent. but the hang seng was higher by about 0.3%.
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been watching the jen versus the dollar, too. the dollar's been a little stronger. 88.69 is the last tick on that. a check on the markets overall. u.s. equity futures are looking a little bit lower. dow futures down by about 29 points. s&p futures off 3.5. nasdaq futures down by just over 2 points. this is all coming as we get dow component earnings. we've now had four dow components reporting before the bell this morning. >> similar earnings reports, verizon reporting fourth quarter profit of 38 cents a share. that was below estimates of 50 cents. numbers were impacted by iphone subsidies as well as superstorm sandy. it is down about a dollar. dow component travelers reporting fourth quarter earnings of 72 cents a share, much higher than the 14 cents that the street was expecting. revenue was roughly in line. that stock's going to be up almost 3%. another dow component, johnson & johnson reported $1.19 a share, two cents ahead of expectations. its fourth quarter revenues were a little bit shy in 2013 the
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outlook looks a little bit short and the stock indicated down about a percent. >> and the fourth dow component to report this morning is du pont. they came out with fourth quarter earnings above expectations. revenue came in roughly in line. joining us right now with more on these results is ellen kullman, chairman and ceo of dupont and ellen, your characterization of the overall globe was that we are looking at a slow growth world economy. so, how does dupont take that and kind of make lemonade lemons in that situation? >> good morning. it's really great to join you this morning. you know, uncertainty was the watch word for 2012. and although we saw some bright spots coming through the fourth quarter, you know, 2013 i think is setting up to be a cautious year. the question is, how will the u.s. economy respond? we've taken good steps around the debt, but the deficit has to be dealt with. and it needs to be dealt with in a matter of months. you know, how is china going to come through, not only lunar new year but the final changes in
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their government? you know, i think the economy's going to strengthen as the year goes on. but i think the first half is going to be -- there are a lot of question marks out there that we all have to deal with. from dupont perspective, we're well positioned in agriculture. we're coming out of a strong latin america season. year over year our ag segment revenues were up 18% and we're setting up very stockly for the north american season in 2013. nutrition and health, industrial biosciences, great process with new product introductions. advanced materials. kevlar, tyvek, going to be enhanced by a strong construction market in the u.s. which is supposed to be up 28%. in 2013. so, you know, i think there are some bright spots in this uncertainty. >> just real quickly. you point out the concerns with china and the concerns with the united states. which gives you more concern when you start looking around the globe? >> well, i mean, i think if you look at 2012 it was both under a
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large degree of uncertainty at the same time that caused some issues. certainly i think the u.s. and construction has sped up to have a stronger first half than we thought. although automotive, the growth in the first half in the u.s. is not going to be as strong. it will grow. but not as strong as it did in 2012. you know, china was a bumpy road in 2012. we saw some sectors in some areas with great strength. we saw them pull back quite a bit in infrastructure investment. the bright spot there in the fourth quarter they announced they're going to install twice the amount of gigawatts in photovoltaic capacity in 2013 than they did in 2012 to support that industry. so we've seen some revenue growth from there, and expect their infrastructure investments, if they continue through 2013 i think it will bode well for the year. >> ellen, we had a transportation analyst because the transports are at a new high and he looked at trucking
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volumes, and stuff in the real guts of the whole industry, rail shipments, and also shipping data that he looked at. and all of them were contracting a little bit, so he was -- they're kind of wondering why the transports, why the whole index was at a new high. have you seen a little bit of weakness in the same kind of stuff? i know you said cautious for 2013. is that part of what gives you pause? is it a little soft right now? >> yeah, so certainly, you know, we're coming off of lows. so, if you think about europe, there's no expectations there. you know, zero growth. if you think about the u.s., u.s. had very strong growth in automotive last year which drove a lot of parts moving and things like you're talking about in the transportation industry. the growth next year is supposed to be only 2% versus 5% or 6% in 2012. so there are certain segments in industries where there is a softening of that growth, and i think that's going to impact
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different industries in that way. >> so it's not just a slam dunk that we're coming out of, you know, that malaise from 2008, and definitely going to be -- definitely going to be a better world. that's not a slam dunk. i mean you don't sound that optimistic, really. >> yeah, so i think there are hurdles we have to cross. i think there's certain sectors that are going to perform like agriculture. like in the foods and nutritious food ingredients areas. i think those areas are areas where innovation and science really bring a difference to the customers, and they're taking it up and they're utilizing it. i think other areas, there's a wait and see attitude. you know, are we, in this country, going to deal with our deficit? you know, as china comes through their transition in power, they're the two biggest hurdles i see in front of us that we still have to clear to create a real strong economic environment for the world. >> so, the deficit, and the talk that we've heard now coming out of washington, is that we're going to push things back, the
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debt ceiling will be pushed off essentially for three months. is that good news or bad news? i mean what would you like to see happen right away? >> well, i do think that that just continues the uncertainty. you know, i think if there's a time frame and a time line and they can make real progress that that's a positive. i think to the extent that they just keep -- if they keep moving it out i think that's going to be a negative. you know, certainly it's not going to be resolved in the next few weeks. and so if they need to take a few months to really pull together, and really get the dialogue and the actions put in place, that we can make real progress, then i think that will be seen as positive. but i think it really does have to play out in the individual actions that are going to occur over the next few months in washington. >> we also, the gentleman from the transportation said that around the world, and we talk about austerity, a lot of the austerity in europe, i guess, was higher taxes. he said consumers here and around the world are going to have less disposable income
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because of what he's calling austerity, and as a result, that's one of the reasons he's less optimistic, and is austerity something that is here to stay that factors in to your thinking? >> no. i think that when we take a look at 2013, we have factored in a lower growth environment on average. but we've also factored in an improving environment. i do think that as china comes through the transition, and what we've seen about their intent around infrastructure investment, and their announcement around portable pay here is a positive sign. but that's just one sign. and we have to see more. so i think we're entering the year cautiously. we're entering the year cautiously from an investment standpoint. i think you have to play it out as it goes. and you have to take it a month at a time and a quarter at a time. i think doing anything else is imprudent in this environment. >> you mentioned that agriculture was one of the strengths revenue up 18% for the last year. what do you expect the coming year in agriculture, and i'm just trying to get a feel for
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what you're hearing from your customers so that we can kind of take that and look at what it means for other companies that will be kind of building into that, too? >> i think 2013 is shaping up to be another strong year in agriculture. we had in 2012 very strong farm incomes. we have the industry investing in yields. and what that means from the standpoint of advancements and fees, novel crop protection products, these are all things that we're actively engaged with our customers, the farmers today. but i see 2013 as setting up to be a very strong year in agriculture. >> in the united states or around the globe, as well? >> it is around the globe. we're coming off of a very strong season in latin america. the summer season is closing out well. the spring season is starting off strong. we're seeing where the needs around feeding a growing population, and the collaboration that has to take place between the farmers and between industry is growing. and real communication taking place on what their needs are, and that allows us to advance
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our science and really develop new products, whether it's drought resistant native traits or aqua mex product or the first year of our extreme product that's going to be out in the market place. we're seeing a lot of interest in the science, in the new products that can really advance the yield for the farmers. >> the drought resistant products, that's especially important based on what we've seen here in the united states and midwest? >> yeah. we introduced the product last year based off a native aquamex it's called in water stressed area that yielded 8% more than other varieties. and so we see that as being a real advantage. and something that we can engage with our customers and talk to them about their needs for their particular farm in the coming season. >> all right. ellen, we want to thank you very much for joining us today. stocks trading higher on the numbers have been ever since the numbers hit this morning, and i guess that's good news. and a little bit of a birthday present for you. happy birthday today. >> oh. great, thank you very much. >> thank you, ellen.
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we appreciate it. again, ellen kullman, the chairman and ceo of dupont, keeping an eye on that stock this morning and again it is indicated higher this morning. it's been trading higher. >> is she a capricorn? >> you're a capricorn. >> well that's the best sign. when does it switch? >> it switches -- >> that's the best one. >> ellen, are you still there? >> yeah, i'm here. i'm an aquarius. >> oh, you just missed. i'm sorry. january 20th. >> age of aquarius. >> age of aquarius. okay. it's okay for you. >> ellen, we're going to look up your horoscope, joe reads those religiously. >> i don't believe them. >> -- dates. >> it did? >> and that's confusing, too. >> what is this? >> kind of like the starship. >> what happened? >> oh, they don't know what they're doing, these idiots. i mean, who believes astrologers anyway? it's ridiculous. >> we read them for entertainment. when we come back google is set to report after the bell today, analyst jordan rohan will tell you what to expect from the later quarter. as we head to the break, take a look at this picture of google
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cofunder sergey brin. are you kidding me? >> yeah. he was -- and a guy recognized him. >> oh, my gosh. >> the glasses, too. >> he's lost weight. >> yeah. >> he was spotted on the downtown free train in new york city. those are the futuristic glasses presumably testing google's project glass. >> yeah. >> he stood behind me in front of the tracks i'd go over to the wall. i wouldn't stand in front of that guy near the tracks. >> those are -- if those are the glasses those are the ones that overlay digital information on the physical world in a whole different view of things. >> number one, i'd buy him a cheeseburger, i think. and i don't know. >> he's definitely lost weight. the developers version of the glasses is expected to be available to softwaremakers a little later this year. >> why are you taking my picture. >> go ahead. >> "squawk" will be back.
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welcome back, everybody. take a look at the futures this morning. indicated a little lower. we've gotten some earnings reports out from dow components that have been mixed. at this point, we do see that dupont's been trading higher. you also have travelers that's been trading higher. if you look a look at verizon it's been trading a little lower and johnson & johnson haven't looked at in a few minutes, but
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it's trading a little lower, as well. you have dow futures down by about 28 points. the world's most powerful leaders and business and government will be gathering in davos switzerland this week for the annual world economic forum. the group's founder is worrying that the world has not yet escaped the risk of economic collapse. economist claus schwab is calling for leaders to focus on what he calls cautious realism and recovering public trust to try and avoid another major crisis. he'll be kicking off the conference tonight. also among tonight's speakers is the actress charlize theron. andrew's going to be reporting live from davos for us tomorrow morning at 6:00 eastern. >> is it me? what's charlize talking about? humanitarianism or something? >> yeah, they always have people, actors and actresses, famous people who are there, usually promoting charitable -- >> perfect. >> he loves stars and celebrities. >> maybe she'll be on with him. >> google's quarterly results are out after the bell. jordan rohan joins us with a
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preview. google's earnings it only takes us like a quarter to figure them out and then we're on to the next earnings. but, is it going to be inscrutable as usual? what should we be looking for? >> this quarter is especially confluence of particularly inscrutable things. >> good. what we like. >> you've got some selling a unit in late december that will be excluded from results. when the revenue number comes across only a handful of analysts, including myself have actually adjusted our forward numbers -- >> why? >> because they just put it on a blog post in december. there's never really a formal announcement of it. >> so their analysts aren't as good as you? >> listen, i start to make a lot of assumptions. we're going off what we think is the right way to split the motorola home business from the motorola phone business. they sold the home part of it. that's difficult. currency has been a big swing. the euro got stronger. that's difficult. >> what will people key off of in general is it the revenue number? is it the bottom -- what's the most important number and how should we look at it? >> if you peel everything back
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and say what is the one thing people care about? >> not google? >> it's the core google advertising business. and what you really want to figure out is, how much is search growing? how much is search growing for google? are they gaining share, not gaining share? and that transition from desktop search where google keeps all the revenue, to mobile search where they share a lot with apple and other partners, that's been a bumpy one. that's been a very bumpy transition. we want to figure out where they are in this. at some point, there will be enough mobile devices, enough revenue on that side when the mobile ppcs, cost per clicks go up, google's revenue will go up. we're not there yet.mobile is a today, about 25% of clicks. when it gets to be 40 or 50%, which can't be that many years away, given how incredibly high the appetite is for people on these mobile devices to shift,
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it will be easy sailing for google. until that happens, it's every quarter is a crapshoot kind of a stock. >> do you easily search the internet with your blackberry? >> on google, yeah. >> you do? maybe -- i don't know. i think that we're -- that may be why i get rid of the keyboard just to get on something like -- >> no, i will admit i have one of the minis. >> that's so much better. >> a mini ipad that works really well, too. >> there's another -- >> it's a little clunky and i think it's a little slow. >> i'd sit there just looking at it. >> i can do it but it's slow. >> there's another dynamic, which is worth discussing, is that when people search for restaurants they may go to open table. that's not google. when they search for travel, they may go to kayak or expedia or orbitz. that's not google. and they may go to the apps. so apps and vertical specific searches are taking share from google be the one place that everybody searches for everything online. that cuts google out a bit. they lose centrality.
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that centrality has enabled google over the years to get over half of all online advertising. if that goes away, and people get the apps that they like, on their phone, they don't have to go back to google to search for a restaurant or airfares or such. >> what's your number or earnings per share? >> i've got 10.65 for earnings per share. i'm ahead of the street. >> what's the other number you said, a ref flew number for search and the growth, right? >> the owned and operated core google search number. i'm at 19% growth year on year. i'm higher than the street. actually think the stock probably trades up today. however -- i think this is not one that's going to break out of its recent. it has tended to kind of go look at the mid 700s before and fall back down. i'm below the street for 2013 earnings, i'm at 43 versus the street of 46 dollars a share. so it's a tricky message to
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deliver to investors depending a lot on your time frame. for the longer-term investors, there are easier names to own. ebay is an easier name to own. it's one that has still much to prove. people believe the platform hasn't been revitalized. i do think they are revitalizing that platform. and i like facebook. >> facebook. great. all right, jordan, thank you. appreciate it. we'll be watching. >> when we come back, a former microsoft executive taking some shots at the ceo steve balance her. we'll bring you that story next. then we'll be talking to the ceo of cowan and company about the budget fights in congress. [ male announcer ] at northern trust, we understand
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welcome back, everybody. a former microsoft executive says that ceo steve ballmer is not the right leader for the company. former senior vice president makes thats aertation, assertion in a new book. he was in charge of windows software sales claims that ballmer forced out any manager who challenged his authority. he's the highest ranking executive ever to write a book about his time at microsoft which is known for ex-employee loyalty. his criticism echoes that of investor driefd einmore. >> coming up we're going to head to chicago for a look at the
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events likely to drive markets in this short trading week. plus we're going to talk to the ceo of cohen and company about a possible extension of america's debt limit. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or turn 30-million artifacts... ♪
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into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it.
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welcome back to "squawk box." four dow components reporting earnings this morning. all four are on the move. insurance company travelers earned 72 cents a share for the fourth quarter. that was much better than estimated of 14 cents. earnings were helped by a significant increase in underwriting margins and many times we give travelers earnings and scratch our head sometimes. sometimes they're low. sometimes they're high. but the stock price has been a thing of beauty to behold. dupont earned 11 cents a share, excluding certain items. and now it's four cents above estimates. it's 2013 thought look is also indicated higher. verizon reported fourth quarter profit of 38 cents a share. >> but this is where -- >> that was below 50 -- >> there's sandy losses. the company is saying that it should really be 45 cents versus -- >> sandy losses back in? >> if you add the sandy losses back in. thompson is already going with 38 cents. unfortunately there's no one at thompson to actually speak with right now.
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even though there are four dow components. dinakar, how about you? >> i think most analysts were already adjusting for it. so it looks like it's a miss. but it's 45 krz 48 to 51. so i think the 45 is probably the right adjusted number with the being story being margins being weaker. margins were higher. cap-ex was higher. so add back in it's a, you know, single digit miss but it's a miss. >> people look at different metros, they look at wireless ads and fios and all that other stuff there's a lot of different things to base your decisions on with verizon, right? >> i think verizon was slightly higher. arpu was slower, ap pecs was higher. nothing radical but all the not the good trend it was before. so when you look at this multiples, this was a big beneficiary of the flight to safety, right? and at this point looks like things are topping out. >> so -- you at almost 5%? >> yes. it -- but dividend payout is
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complete. they're paying out in almost every penny of fashion. >> and johnson&johnson earned $1.19 a share. two cents above estimates. 2013 outlook is shy of where wall street is. stock is down slightly. >> let's get a check on the markets. john brady joins us from the cme in chicago. he's the managing director at r.j. o'brien. john, it's good to see you. >> nice to see you, becky. >> we've been talking about how the gains that have come in for the last couple of months could be hard to follow up on that. what do you think the big trends are right now in the market? >> i think a couple of things. first of all as you said earnings. earnings expectations in general in a very macro sense have been downgraded. keep in mind the fiscal backdrop of the fourth quarter of 2012, as long as with hurricane sandy sort of brought earnings expectations down so there's room for earnings beat. of course ibm and google later on today will have a lot to say with the market performance during the course of the week. something else the market is paying attention to will be home sales, both existing and newer home sales later on this week.
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they should be very, very strong. and then, of course, we'll get some important words from ecb chairman draghi on thursday. you know, within central bank world, becky, it's all been about competitive currency devaluations. now the tail risk has been removed from the eurozone late last year, and with the weakening of the yen it's about currency evaluations and independence of central banks moving forward. >> okay. so, that means what, john, in terms of whether people are going to feel good about our economy versus everybody else, whether people are going to feel good about stocks overall? again the united states economy remains the tallest midget in the room. the investment environment here in the united states remains relatively benign. interest rate policy benign. as long as foreign exchange volatility remains rather muted, becky, risk asset, both housing and equity should continue to do well. we expect s&ps probably to get above 1500 by the end of march, beginning part of april. >> i'm sure people everywhere are going to be irritated with
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you this morning, john. let's talk about some of the things that we heard from these companies who have reported today. we spoke with ellen kullman the ceo of dupont a little earlier. we talked about how things like construction are expected to be very strong in the first half of the year. but things like automobiles, maybe not as strong as they were at the end of 2012. is that things that the stock market knows at this point or is this things that could actually move some of those other indices? she also talked about something something being very strong and maybe that helps somebody like a john deere. >> those are two different stories. fnks financing rates and borrowing rates remind very, very kind and a turnover within the domestic stock of automobiles should continue to lend itself to further automobile sales. likewise, too, china is just exporting 1 millionth automobile this year. so i think global automobile sales remain strong. i think the commodity aagricultural story is a story for later on this year. as you know, becky, we're experiencing a very cold day and week in the midwest here but the real story is drought.
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and the lack of moisture within the air. commodity prices higher up d during the course of the year. which has the potential to pinch consumer spending. but i don't think that story here is in the short-term. i think it's more of a medium summertime early fall story. >> okay. john, thank you. great talking to you. >> thanks, becky. >> right now let's get some more from our guest host today dinakar singh, founder and ceo of tpg-axon capital. we talked about your broad views on things. how this is going to be a little more difficult of a year. you're not going to see all the averages rise the way they did last year, perhaps. but, you do focus very specifically on some areas and some stocks that you think are going to be great areas. you already talked a little bit about health care. what are some of the other stocks that you hold? media stocks? >> yeah, so, i think like as you said i think this is a very good stock picking environment because when you're focused on whether we're going to be crashing or soaring what happens in between matters a lot. after all the adrenaline it seems like things are getting
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focused on bought up line and microstocks. for us i think when you look around the world first, if you can find cash glow that's not overvalued and a low rate world it's worth a lot. verizon to us is an example of expensive cash flow. it's a decent dividend. i would own verizon over bonds but they've had every penny they make and you can buy companies in the media business like news corp., viacom, that have double the free cash flow yield. so i think from our perspective there's still areas where you can find companies that actually have free cash flow. if you go globally ntt has the same dividend that verizon has but it has half the cap ratio and the business in japan looks like the u.s. business from three or four years ago. it's really starting to turn and stabilize. when you look globally or look across other sectors you can find places where people haven't paid for safety. i think the other places you want to look is real structural change. for example shipping is a great business globally. it's been a disaster the last couple of years. so as an example the stock smart
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guy a norwegian billionaire has made a fortune in the drilling business and basically he's been, front line basically is buying up ships on the cheap to go and really capitalize on shipping. and it's always good to be someone coming in on a low capitalized basis buying as the -- >> was it just an over build out? >> basically weak economy, massive build out, cheap financing and at this point -- you can't get financing to build ships so people have gone out of business. the shipyards themselves basically are pulling back as well. so if you have capital now and your new entrance it's actually a good time to consolidate assets. first i think it's looking for change industries. shipping is one. aerospace suppliers have been an area we've been very fond of and still are. hospitals as you mentioned are another. so for us these are all areas where you can get still a lot of structural growth in a world where cyclical growth is going to be tough to come by. >> what about aerospace suppliers? >> saffron in europe and the aerospace here. so i think what do we like about
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them? first, the airline industry in the u.s. and japan, as well, is -- has really transformed. it's like airlines are actually making money. which is incredible. that's the good news. the bad news is counting on them to maintain this one forever not such a good idea. there was a real pause during the crisis. companies needed to spend money but they didn't because they couldn't or they're scared and now they've got to go and refresh their fleets and modernize. so the winners are the suppliers. and you sell the equipment and you've got 10, 15 years of maintenance afterwards. so this is again an area where even if gdp is low and choppy around the world, you're going to see structural growth for these companies for the next 10, 15 years. and that's what you have to find. i think we were talking with du pont this morning, right, i think when you look at companies like this, the challenge is, for dupont, global gdp is going to be the single biggest driver of whether or not earnings will grow a lot or not. for an investor, if gdp is going to be choppy you want to find
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places where there's a self-help story to make some money from. >> what would be an example? you say a slow growth world economy? >> so for example in our case, we, so it's funny, alan talked about construction, it's weaker in china. i think around the world when you look at offsets some places good some places bad. we have a large company called rockland which is in the chemical world. rockland. smaller company, but they've actually got one overlap business with dupont which is a depressed business. low multiple. lithium and things related to another area that's a great growth area for them. but in the chemical world i think you're going to see large guys, basf, dupont, dow, acquire other companies, balance sheets are good. they need to generate growth so they'll buy. if you can buy something where earnings are going to grow structurally, multiple is low and it's a pickup target it's a good way to win. >> okay. we will have more from dinakar stale head. dinakar singh is our guest host. >> still to come, house
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republicans seeking to pass a four-month extension of the debt ceiling. joining us to talk about the debt fight in congress, jeffrey solomon, ceo of cowan and company. he's making his way to the "squawk" set. what we call a perp walk, no guy that runs a big wall street needs a perp walk, do they? >> squawk walk. >> kind of like walk like a duck. >> all right. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade.
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welcome back to "squawk box." joining us now on set to talk equity market structure, and the debt ceiling. jeff solomon cowen & company ceo. let's start with, i'm intrigued now. equity market structure. what are you going to talk about now? how do you want to talk about that? >> well, i think, i mean, we've been talking for a little over a couple of years about how crazy the equity market structure has gotten in terms of fast speeding, electronic trading, high frequency trading and how basically we've gotten away from fundamental investing in the equity markets. and so, there's a movement afoot, later on, actually beginning of next month, to have a roundtable discussion at the s.e.c. about a widening tick increments, adding bid offer spreads for small cap stocks and a way to try to drive liquidity back into the small cap market. >> my question is, if we did see a return of the individual investor and just more interest
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in the stock market, i argue was very low, still, even though we're getting close to highs on the -- >> i agree. >> i still think it's low. wouldn't that solve a lot of the problems without doing anything, if the individual investor came back? and, or is it a chicken/egg thing, where because of the unfair perceived unfair playing field, maybe investor individual is hesitant? >> i think it's definitely the latter. so i think if you're an individual investor it's kind of tough to compete with some of the electronic trading tools. i like to say, if individual investors come out of their houses armed with pitchforks and people are in the streets fighting with semiautomatic assault rifles, that's not a fair fight. so one of the things we've been talking about with regulators is how do we bring some sanity back to the markets? how do we slow them down a little bit and focus on fundamental investing where price is more important than time? one of the things that's happened in the markets that may seem nuanced to viewers but i think it's very real, time has gotten more important than price. i've got to do it faster.
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i need to execute this trade at this nanosecond because in three nanoseconds it's going to be somewhere where i can take an advantage. i think if you're an individual investor that is wholly unfair. >> hard to put the genie back in the bottle. hard to put the toothpaste back in the tube. i got a lot of these. but the problem is, you think about -- so i think social media has gotten to the point where so much news is instantaneous and blogs, there's no accountability. i'd like to put all that back in the bottle. it's never going back. as technology moves forward it gets harder and harder to say okay, hold on. we're not going to do everything we're capable of doing. we're going to go back and put guard rails in? >> i think you can -- but i think we can do things. so we're not going to regulate the press. because we can't do that because of the first amendment. but we can regulate the markets. >> we can't put humpty-dumpty back together again. >> we do regulate the markets. one of the things that you can say is that we're going to slow down -- we're going to slow down the execution rate.
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we're going to actually i would make the argument that wider spreads make it a little bit more onerous on people to execute more quickly because there could be a bigger penalty for being wrong. part of what's gone on here is there's very little penalty for being wrong. >> you're talking about individual investors have the perception, are they right? >> i think they are. i mean, i'm not going to -- not going to say that -- that they're wrong about this. i mean, we had routinely seen what i would call predatory readers of hap who try to pick off retail order flow. that's a very big -- >> lasts a day or two and you get total pennies. if you're an individual investor dinakar has 20 billion dollars or something messing around with. you move there everybody knows what you're doing you can't get in, you can't get out. i think individual investors have a lot of advantages instead of the bigger players, right? >> well, every trade looks like a retail trade today. that's something that's fundamentally changed. everybody trades in 100 lots
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today because you can because there's a lot of technology available to mask your trading capability. i would argue that really it's become very important part of market structure to know how to mask your trading capability. and i think that that that really drives liquidity out of the market. i think we've got too many venues. and again, the thing we're talking about here is really focusing on a small subset, a small capital -- >> here's a company, some company like wow i love what they do, i'd buy whatever i want to buy, whether i can afford it as an individual investor and then a year later i check it out and i've made some money. i don't see how that changes with all of this flux on a daily -- >> i think part of this is bringing research back, fundamental research back to the marketplace. the way the equity market is structured today it is difficult from an economic standpoint from a firm like ours to write fundamental research on small cap stocks. >> can't make any money on it. >> i would argue if you would allow for there to be money made, a reasonable amount of money made in small cap stocks, trading at wider increments --
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>> this is all about you, isn't it? >> today it is. i'm here. >> how would you be allowed to make money on it? what changed in the regulations that made that no longer expense -- because before the reason it was broken about is because of the banking. how do you actually make money on that? >> i think it's a good question. so i look at the world and those who carry about alpha generation and those that care about passive management. our business model is very much squarely to providing fundamental research for alpha generating ideas and those can be in small cap stocks and large cap stocks. we discuss in dialogue with some of the larger investors about investing in small cap stocks one of the things we hear is there's not enough liquidity. if you take a look at market volumes today, they're really tilted very much towards large cap stocks. one day last week i paid 40, 50 percent of the nasdaq volume was in the top 20 names. that should just tell you that there's something wrong with market structure and there's no silver bullet, a healthy dialogue about bringing liquidity back to small cap
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stocks is really something that should be at the forefront of our regulatory initiative. >> would that change things for you? >> i think we try and focus on the middle companies that are big enough to actually be actual for us so we can focus on a few things. when it gets to ours it gets to for us too because we're not going to add a lot of value to google, so i think first that middle spot is important. every investor has got to find their sweet spot. you've got to assess your strengths. ferret out where you're getter off and for a retail investor as well, reality is that to get information all around the world has gone up tremendously compared to five years ago, ten years ago. we haven't gotten any wiser. so we have lots of information, we get i very quickly. i'm not sure we're any better at knowing what to do it. information comes across, people don't know what to do so they react instinctively. correlation is a short-term jurn and then people figure it out. so from our perspective our whole focus is saying let's try
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to ignore all that. trying to predict that surge we're going to see when these things happens which things make sense, which -- >> we've got to go, dinakar, thanks. we'll be back with dinakar in a second. we've got to get on. thanks, jeff, for coming in. >> pleasure. >> we're going to kick off the short trading week with jim cramer's take on earnings, the presidential address and the har-bowl.
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welcome back to "squawk box." jim cramer joins us now from the big board. jim, verizon. >> i don't know. look, people want to sell verizon on this, the miss or wireless. this is a bond equivalent, as your previous gues . yes, they're paying out a lot. but it's not going to go back to the 30s. i think it's fine. >> dupont. >> dupont, a margin which is a whitener, you can't put the toothpaste back in, as you mentioned, but it looks better. i liked ag margins. i'm surprised latin america so strong. i like the quarter very much. >> trailer? >> which one? >> travelers? >> oh, travelers.
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wow, look, when you get these horrible storms, they raise your premiums. this was an extraordinary quarter. this stock is going much higher. >> jim, i was surprised to see them this quarter. you know they're going to get the raised premiums, but it's already taking effects. is that why we're seeing the higher margins? >> the storm last year, they never screwed up on their balance sheet, putting through higher premiums, the margins are going up. what a remarkably well-run company. doesn't get enough credit. >> how about the speech yesterday? >> you know, i read the "times." they're saying natural gas is the winner. this was an anti-fossils fuel speech. that's what it was. this is a anti-carbon speech. it looks like the global warming is the key issue that the president wants to face. and wow, i guess you've got to get out of the coal companies. >> jim, are you playing hurt this morning? you sound a little sick. >> you know, i got what everybody else has. >> it doesn't go away. >> no. back and forth and back and
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forth. can't get rid of it. >> glad you're here anyway. >> thanks. >> we've got to keep it short, jim. thanks. we'll see you. coming up, we're going to give our guest hosts the last word when squawk returns. tomorrow on "squawk box," earnings alert, dow components mcdonald's and the sector report. we'll bring you the numbers and instant analysis. plus, guest host jim rorh tomorrow at 6:00 a.m. eastern. at optionsxpress we're all about options trading.
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on the all-new cadillac ats. back to our guest hosts for the last word. there's sharks circling around the company, you're one of them, right? >> we're not typical activists. that's not what we do for a living. we have 20, 30 stocks that matter. if we see one that we actually can be active in we get involved. >> where are you now? >> the official process has started. there's a 60-day process, and if they vote, they can replace the full board and effect rule change at the company. >> you're at what percent of the

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